Yepp, you are right. Porsche was very early in implementeing turbo and probably the first manufacturer to implement BOV so their first attempt to build BOV created somewhat overbuilt and unnecessary assembly.
Basically, you have a vacuum-operated cylinder that moves and opens the chanell that short-circuits the turbo and re-routes air back into turbo intake on decell. It can be replaced with el-cheapo Bosch plastic BOV and it will work just as fine. Later (on 964:s) Porsche modified it and used ordinary BOV as seen on most turbocharged cars nowadays.
Frequency valve is pulse-width modulated by lambda brain to hold >controll pressure< to certain value. Lower controll pressure means more fuel. Input into box is lambda sensor and output is pulse-width to power frequency valve. If lamba goes up or down from 1.0 it will trigger a signal which alters pulse width and thus control pressure until lambda goes to 1.0 again. If you stomp on it brain is bypassed and motor goes open-loop.
Few pics of BOV-assembly (taken when I changed gaskets to get rid of "clonk-clonk" sound on deccel):
